General Information and Analysis
"we
are all floating around on a sea of artificial liquidity right now. This is not
going to last." - Jim Rogers
Have you ever used the editor in this blogger? If so, have you found it frustrating to the max? Goodness, I am astounded at the inconsistency in formatting. Hey, but it is free. Google, I send my thank you (and sincerely mean it) for providing this service. However, is there any way to improve the editor?
US
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6:31 AM PST – The market just opened. I wanted to make this comment to
day-traders. Of course, I will not
really provide them anything they do not already know, but still it is worth
stating in my opinion.
o
Day-traders make money when the price
moves, and moves a lot. They lose money
when the markets are very choppy, and price since 11/15/2003 has been difficult
to find a trend or large price move. The True Range is decreasing, and decreasing substantially since 1st of October 2013.
o
The market appears (and there is a lot of
agreement on this point) to be waiting on the Federal Reserve to announce (or not) tapering.
o
Breakout traders (short term traders – not day-traders
necessarily – are waiting for a breakout)
The range on S&P 500 futures contract is 1775 to 1812.50. While I’ve accomplished academic studies of
breakout trading, I’m not an expert in that form of technical trading. However, what research shows is that there
are more false breakouts than valid breakouts.
If you research this and come to the same conclusion, then the next
question must be Can you make money on breakouts? The answer is “YES” if you have a good
trading plan, because the markets have a tendency to trend long enough to make
more money (assuming you have discipline) on the break-out trend then the
losses on the false breakouts. If you
want to read a good introductory book on position sizing and risk management,
read Van Tharp’s Definitive Guide to Position Sizing.
- House, Senate leaders agree to budget deal. The attempt here is to ease the long-criticized (by liberal-Democrats) automatic spending cuts for the next two years, cut the deficit by $23 Billion – a very modest spending reduction, and almost totally remove the risk of government shutdown in March 2014. Look for right-wing Republicans (tea party) to be very unhappy. Shoot, how can you (or anyone) get excited about this? It is a Greek Comedy with horrendous under-tones for our children.
- Blackston (BX) has some “good news”. Hilton Worldwide (HLT) is due to price its IPO at the market close today. The goal would be to sell shares at the top of the $18-21 dollar per share level. That would bring in $2.7 billion cash, and Blackston (if that happens) will enjoy one of its most profitable investments ever. If you own BX share, be happy… A nice Xmas gift your way cometh.
- Retail Sales: There is actually much good news due to come out in Retail Sales. Tomorrow, US Retail Sales for November will be released. It is expected to be strong. Consumer Credit is soaring, personal spending reports indicates the USA consumer is spending more than they make (which has not happened in a long while), and it is Xmas. The girls and boys at the Federal Reserve must be smiling. L Just to throw a wrench in, however. Costco (COST) missed EPS forecasts. EPS came in at .96 per share, and missed expectations by $.06. Not to worry, however… Revenues increased by 5% y/y to $24.47B.
- States’ income to edge (grudgingly) up this fiscal year. Now these are projections, and you know right? Rarely are financial people any better at forecasting revenue than economists. The National Association of State Budget Officers say that the projected increase will be .8% in 2014; down from 5.7% increase in 2013. OK, that is an increase on a decelerating note. The reason given for the large increase in 2013 was a change in federal laws. So there you have it: Reuters reporting the news from a positive perspective, and USA today, wondering how that is good news.
EuroZone
The EU yesterday agreed on a plan
for dealing with failing banks. (As you know, the ECB (European Central Bank)
already has a plan in place to deal with sovereign debt crises that spring
up.)
HEADS UP: The EU plan could happen
in the USA and Canada…
The EU agreed to make major
depositors the first people/organizations to pay if a bank needs cash to shore
up its finances. The EU based this
agreement on the Cyprus crises last year.
Next the bank would look to a country’s national resolution fund. The ECB along with EU politicos will work
toward a common Europe-wide fund that would rescue banks. From the discussions the public has access
to, it would appear the EU would use the UK’s banking plan (not the US FDIC
insurance).
I
do not know about you, but I believe this move toward taking depositor’s cash
to stave off bank crises is not a good sign.
Why? Because where can you put your money with some reasonable sense of
security? It drives investors, retail
traders, and retirees to look somewhere, anywhere for security. That mattress is looking better (except in
the USA). Why not the USA? Because we have almost no security from bad
guys breaking in and trashing our home, and very little interest by police in
solving a break-in crime. (I have no
figures to back that assertion up, except in our county, we have break-ins
and thefts every day, and not one has been solved last year.)
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